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Most state employees have been paying slightly lower premiums for their health insurance in 2014. Although price decisions have not been made for 2015, the state will likely be in a position to keep any increases in check.
The March revenue report is in. State General Fund revenue for the first nine months of fiscal year 2014 has been higher than estimated but still well below the amount collected in the last fiscal year. What does this mean for the upcoming Consensus Revenue Estimate?
The changes made to Kansas tax policy over the last two years have sharply reduced state revenue. Compared to revenue collections in the other 49 states, Kansas is on one end of the spectrum.
Changes to Kansas tax policy have significantly reduced individual income tax receipts to the State General Fund. Ironically, a portion of the revenue that Kansas has given up now goes to the federal government rather than to the Kansas economy. At a time when many Kansas lawmakers have been reluctant to accept federal dollars to expand Medicaid eligibility, Kansas tax policy allows state dollars to flow the other way.
The Kansas Supreme Court issued a ruling last week addressing two questions about education funding in Kansas: Is school finance equitable? Is the amount the state spends adequate? On the equitability question, the court gave a straightforward “no.” On the adequacy question, the court did not directly say “yes” or “no” but directed a lower court to review the question through a somewhat different lens.
Revenue collections for February were higher than expected. But after examining the details, the February results do not reveal much about the accuracy of the fiscal year 2014 revenue estimates or the direction of the Kansas economy.
Even if KanCare is successful, costs still will rise. The governor’s budget appropriately adds $70 million for Medicaid in FY 2015. A decision to allow expanded Medicaid eligibility would not alter that amount much.
The governor’s spending proposals increase the gap between revenue and expenditures, but ignoring the governor’s proposals does not fix the deficit.
The state’s revenue estimators predicted that income this fiscal year would drop $485 million from last year as a result of dramatic tax policy changes. Seven months into fiscal year 2014, they appear right on the mark.
Lawmakers are able to finance the governor’s FY 2014 and FY 2015 budget proposals by drawing down the bank balance. Once the balance is gone, the state's revenue stream does not support current spending patterns. So, how did the state obtain the $709 million balance that is now being spent?